In Citi's European Rates Outlook 2018,.........>

EGBS: In Citi's European Rates Outlook 2018, Harvinder Sian et al make the point

that "Net supply in 10yr (gross minus ECB net and reinvestment purchases)

correlates well with outright Bund yields, as well as real rates and slope. We

expect Bunds to weaken in January".

- Regarding the curve Citi write "Trading on forward steepeners has been hurt by

the end of a rate locking programme by a prominent public sector entity - which

allowed 30yr swaps to rally and looking ahead to upcoming insurance sector

reform, should richen again."

- The reference to insurance company reform is the potential new way of

undertaking stress tests as recommended by EIOPA last November that would

increase capital requirements for insurance companies in a low rate environment.

The 'advice' has yet to be formally implemented by the European Commission but

might start in March.